Outsourcing Human Resources Management: 6 Benefits to Just Letting Go June 2, 2010
Posted by Primary HR Outsourcing in Business Management, Human Resources, Insurance, Outsourcing, Payroll, PEO, Start ups, Uncategorized, workers compensation.Tags: Business Management, Human Resources, Outsourcing, Payroll, PEO, Start-ups, workers compensation
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Outsourcing has become a major part of business these days, on all levels, and a lot of companies are finding one of the most valuable areas to focus their outsourcing leverage is on human resources. For other companies, putting this complex business paradigm into the hands of an outside entity is a nightmare waiting to happen. But is it really? Here are 6 benefits you can get from letting go of a little responsibility and handing the torch to a PEO.
1. Expertise
People often look first at cost savings when outsourcing, but one of those most undervalued components of an outsourcing firm is their expertise. When you work with a credible provider, you are accessing resources that are wholly focused on human resources.
An in-house HR sector, on the other hand, is limited because the overall goal of the company is still the product or service offered. A PEO has unrivaled experience offering human resources for a variety of different organizations. They have seen it all, they know what works, and they are committed to building the most effective processes they can.
That IS their business.
2. Avoid Lawsuits
With expertise comes a broad knowledge of laws and policies that might affect your company. When you have a business to run, it is hard to keep up on constantly changing employment law, and if you don’t have a solid understanding of the American legal system, it can be downright impossible.
3. Enhance Productivity
A PEO is not just well-versed in legal mumbo jumbo and protecting your reputation, they also are current on the best practices for increasing employee productivity. Not to mention that if the right tasks are outsourced, employees can be left to focus energy where it matters most.
Lastly, they know what policies are best for making your employees feel comfortable and empowered in the workplace, such as diversity and inclusion programs. Not for reputation purposes, but for the good of your workers. If you haven’t realized it yet, what’s good for your workers is what’s good for the bottom line.
4. Save Money
Well, that’s all great—but what about money? After all, you are in the business of doing business, right? Outsourcing human resource management is extremely economical—this is why most people start in the first place. Make sure that if this is your number one reason that you don’t cut corners finding professional help, but freeing up manpower, stream-lining processes, and increasing increased productivity equals cut costs and business growth.
5. Be More competitive
Like a domino effect, cutting costs and increasing productivity can set you far ahead of the competition. In this recession, most companies will take as much of either as they can get.
6. Evolve Your Company
What it really comes down to is evolving your organization. If you haven’t heard it said many times before, maybe you haven’t been listening—a business that stops changing is a business that is dying. You always need to be getting better at what you do. More sophisticated. More complex.
Outsourcing takes company resources out of areas where they are not needed and puts them in the hands of an outside force. This allows you to rechannel your own resources into improving other areas and creating new positions that add more value to the company.
Even if you are a smaller firm that wants to start acting like a bigger firm so you can take advantage of these 6 benefits, you can start looking at human resource management as something better left to the experts. In fact, it makes even more sense for a smaller business without the hierarchy and many departments of a multinational corporation.
Take a hard look at how much time you spend on managing these areas of your company. Could that time be spent somewhere else where it would add more value? Are you even doing that great of a job, or is lack of expertise holding you back? Ask yourself the hard questions and decide now if it is time to take the next step.
I am always at your service,
Rick Matthews
Have a Business or Starting a Business and Need An Edge Against the Odds? May 25, 2010
Posted by Primary HR Outsourcing in Business Management, Human Resources, Insurance, Outsourcing, Payroll, PEO, Uncategorized, workers compensation.Tags: Business Management, Human Resources, Outsourcing, PEO, Start-ups, workers compensation
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The Small Business Administration tells us small businesses fail at a rate of 8 out of 10 (80%) within the first 5 years. Of the remaining 20% year 80% of them are gone by the 10th year. Staggering statics not for the faint hearted who plan to open their own business.
Money is the number one cause, or more appropriately the lack of money is the number one cause for business failures. Is it that the business didn’t have enough money, or that the money it had (earned) didn’t go far enough? Or perhaps the business made enough money to survive but errors resulting in penalties and fines over whelmed the cash flow causing the failure.
Over the years working with all types of businesses I’ve observed that businesses usually generate enough profit margins to succeed as long as nothing goes wrong. As long as all their customers pay on time and don’t bounce checks, as long as they don’t miss payments and incur late fees, as long as there’s a steady stream of work and as long as there are no mistakes handling payroll, payroll taxes, garnishments, and other employee related expenses. In other words as long as everything is perfect. Perfect plans exist and most start-up businesses conceive perfectly how to execute the plan, but unfortunately perfect execution doesn’t exist, and therein lies the rub. Stuff happens and when it does businesses fail.
Recently I was talking with a valued customer we were remembering how long we’ve been working together (since the last century) he pointed out he hired us before he opened his business. The next day I was visiting with another of our valued customers and he commented about his start. He’s been a customer for more than six years; he too hired us before his first employee and just days before he began working on a new plant project. This got me to thinking, of our “startup” customers how many of them are still operating today?
I have to admit I wasn’t surprised by the results I’ve started other businesses including this one and know that limiting the number of things that can go wrong is extremely important after all plans are perfect it’s the execution that isn’t. What we found is of the business owners who had decided to start their own business and hired us before they hired employees sixty-one percent (61%) are still in business at five years and of all that passed that milestone and are 10 years old or older 92% are still in business.
Now I’d love to say that statistic is due to our ability to choose great customers (and we do) but the truth is our customer have an advantage other businesses owners don’t have. Our customers are able to focus on the “business of their business” that is they can focus on growing their business, training their employees how to be great ambassadors, getting paid on time and all the important revenue generating activities that contribute to the life blood of the business. Conversely they are not distracted by “the business of employment” and spending precious resources on matters that does not generate any revenue.
Another benefit of our services is we stabilize cash flow. Cash flow is the life blood of any business and spikes in cash flow demands (like down payments for insurance products) can give a business financial heartburn. Periodic cash demands for payroll taxes, unemployment taxes and other quarterly or monthly tax demands can also provide cash flow indigestion. If a business is late on any of these demands then penalties and interest that accrue often outstrip the profit margins of the business leading to failure.
So there you have it working with us provides stability to businesses by steadying cash flow, lessening the demands of non revenue generating activities and provides owners the ability to focus on growing their business. You can learn more about our services by visiting our website (www.primaryhroutsourcing.com) and downloading a free report “Increase Profits – Three Steps to Lowering the Cost and Liability Associated with Employees”
I am always at your service,
Rick Matthews
Riddle me this, riddle me that, how’s a person with government care going to get that? May 18, 2010
Posted by Primary HR Outsourcing in Benefits, Outsourcing, Payroll, PEO, Staffing, Uncategorized, workers compensation.Tags: Benefits, Outsourcing, Payroll, PEO, Workers Com
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As promised in last week’s article today we’ll touch on medical benefits.
The pendulum swings
This time last year as the debate regarding health care reform raged on carriers were motivated to sway public opinion and attempted to do so by offering some of the lowest rates we’d seen in years. For a short time we saw employee rates for group plans back into the $1 per hour range, since the law has passed the price pendulum has swung away from business and families and it’s likely to swing even further in the coming years. (check out the benefits tab to see some of the reasoning).
A dual benefit you can use
During the second term of President Bush congress enacted some changes to health insurance that give people the chance to gain control of their health dollar. The programs weren’t touted in the media and certain state insurance commissioners attempted to block their effectiveness. Regardless they appear to have come through the current reform mostly unscathed although Congress did limit one benefit that would have helped families reduce medical costs. [We’ll discuss that a bit later]
Previously Congress established the HDHP – High Deductible Health Plan, and with it the HSA – Health Savings Account. Now not every health plan with a high deductible is a HDHP. To qualify as a HDHP a plan has to function within certain parameters which are adjusted by Congress each year.
On the short list of items to qualify as a HDHP the deductible has to be within a range between $1,200 to $5,950 for self only coverage and $2,400 to $11,900 for families. Since a majority of small business plan deductibles are already beyond the $1,200 mark you can begin to see the confusion the name has equally true also for those who purchase high deductible plans with deductibles for individuals beginning at $5000.00. But let’s not get stuck on the name, for what’s in a name a rose by any other ….. I’m sorry I digress (at least my English Lit teacher would be proud).
The key is if you have a HDHP you can qualify to have a HSA or Health Savings Account. The HSA was also established by Congress and signed in to law by President Bush. It allows individuals to put away money tax-free to meet medical expenses, similar to an IRA the money set aside will grow tax-free and the contribution is tax-deductible. Unlike an IRA you can actually use the money before you retire without penalty as long as it is used on qualified medical expenses. The maximum contribution for an individual with a qualified HDHP is $3,050 and $6,100 for family.
Now you may be thinking you’ve heard of this program before as a Flex-spending account comes to mind. A HSA is different, first the money can only be used on un-reimbursed medical expenses including vision and dental (to see a complete list of benefits look up Publication 502 and Publication 969 available from the IRS) expenses and second which is perhaps the most important benefit is it rolls over year after year. That’s right, no use it or lose it feature.
How one takes control with a HSA
So how do you put this information to work for you, it’s simple. First you get a qualified HDHP (for you and your family) then establish and fund to the max your HSA. Don’t worry if you can’t put the max in day one, you can put regular contributions in up to the max allowed that year before the last day of the year. The best scenario would be to get a qualified HDHP with the lowest out-of-pocket expense available. More often than not it’ll be a $1500 out-of-pocket for an individual and $2,500/$5,000 for a family. Now if that causes your heart to skip a beat keep in mind even a modest $1,500 deductible plan with a 80/20 co-insurance benefit will have an out-of-pocket expense of $10,500 for a family. As you can see the HDHP is less than half the exposure of a modest 80/20 plan.
Once you have the plan in place begin systematically putting money in your HSA, keep in mind these dollars are “pre-tax” and you may be able to locate the funding dollars by making an adjustment on your tax withholding (form W-4)[i].
At the end of each year you’ll see how much savings you have accumulated, that’s money set aside for your medical expense that you did not spend which rolls over to the next year. As your HSA account builds you’ll be able to adjust the out-of-pocket expenses of your HDHP and thereby lower your monthly premium expenses. In theory in a few short years you could have the maximum exposures of the out-of-pocket expenses set aside in your HSA and generate a surplus that will be available for other purposed at retirement.
Like to learn more about these plans and benefits leave your questions in the comment section and I’ll send you more information on alternative benefit programs. You can also visit the National Association of Alternative Benefit Consultants at http://www.naabc.com/ to find people in your comuinity that can help.
Until next time
Always at your service,
Rick Matthews
We help business owners increase profits, solve employment problems, reduce employer liabilities and protect valuable assets thru outsourcing. www.primaryhroutsourcing.com
[i] To be clear I am NOT tax preparer and I am NOT giving you tax advice. To get tax advice contact your accountant or CPA or…. I am simply pointing out there may be ways to fund a HSA without bustin’ the budget.
Note: DISCLAIMER: This information is offered NOT as a solicitation to sell insurance, it is offered as a discussion of options you may want to learn about. You’ll need to contact your health insurance agent if you are shopping for medical insurance, they’ll appreciate your support.
Wal-Mart Paying for Past Mistakes in Gender Discrimination May 11, 2010
Posted by Primary HR Outsourcing in Business Management, Human Resources, Outsourcing, Payroll, PEO, Uncategorized.Tags: Business Management, Human Resources, Outsourcing, Payroll, PEO
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A class action lawsuit filed against Wal-Mart about 10 years prior is finally seeing the light of day and if it proceeds will be the largest civil-rights class action lawsuit in American history. The case was filed by a group of women contesting what they see as gender discrimination in Wal-Mart practices.
Charges include that the corporate giant gives fewer promotions to women, gives these promotions less, and pays men more for doing the same work. Plaintiffs also point out that even though a majority of employees with the company are female, only 1/3 of the managerial staff are women.
While it has recently received the go-ahead from the 9th Circuit Court of Appeals and is moving forward as a class action suit, there is an extremely good chance that Wal-Mart will be taking this one further by appealing to the Supreme Court. According to the multinational corporation, Dukes v. Wal-Mart shouldn’t apply across the nation because of the way their organization is structured. The framework of the corporation consists of a multitude of smaller entities that enact their own policies and operate like stand-alone entities.
When you look at the size of the case, something else they are contesting, it’s no surprise they want to appeal. If the case is allowed to move forward as a class-action, it could involve well over a million female plaintiffs. Add in the typical penalties for gender discrimination and you are talking about a sizable dent in a company that is already suffering in the recession. Not to mention the possible effects this case going public will have on their consumer base.
However, this case is much bigger than Wal-Mart, who is certainly not the only company that could be singled out for disparities in pay among genders, and this is why I bring it up. It could have a significant impact on how employers are held accountable for these situations and what will be expected in the future.
In this day and age, gender bias can be extremely expensive for business. It’s easy to dismiss what is happening to Wal-Mart as something that could never happen to your company.
After all, this corporate giant has had well more than its share of bad attention in the realm of labor practices, and many maintain that they would not be where they are today if not for taking advantage of employees on many different fronts. That said, they have done a lot of PR cleanup in recent years and have made considerable improvements to their reputation. This huge relapse is a stark reminder of how past mistakes can catch up with an organization.
And unfortunately, gender discrimination can be one of those things that creeps into the culture of a company unnoticed. Sometimes these things are so ingrained in our culture that there is no official policy—they just kind of happen whether we are conscious of it or not.
By no means does that make it any less immoral, or less expensive, for that matter, but it is yet another concern that deserves much focus when analyzing your own company policies. That tendency for it to silently grow is where it gets particularly dangerous for a business owner. And it’s why it is essential to get the opinion of an expert on the outside looking in.
We cannot always see these things for ourselves, but if Dukes v. Wal-Mart has its day, there could be some big changes in the way these kinds of cases are looked at, and the resulting wave of similar cases is not something you want to catch while you’re sleeping.
Just when you thought it was safe to go back into the (HR) water! April 26, 2010
Posted by Primary HR Outsourcing in Business Management, Human Resources, Outsourcing, Payroll, PEO, Uncategorized, workers compensation.Tags: Human Resources, Outsourcing, Payroll, PEO, workers compensation
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Kate King, chief executive officer and president of the Napa Chamber of Commerce, on Wednesday, said It is difficult for business owners to know all the ins and outs of labor laws. After all, labor law digests fill two books 600 to 700 pages each, she said.[1]
I don’t want to be an alarmist, but if you own a business and have employees, you have been targeted!
Wage War: DOL Launches Aggressive “We Can Help” Enforcement Outreach
April 7, 2010 at 2:15 pm by: HR Hero Alerts
Senate HELP Committee Hears Testimony on Paycheck Fairness Act
March 11, 2010 at 12:19 pm by: HR Hero Alerts
Immigration Crackdown: DHS Launches Thousands of H-1B Inspections, I-9 Audits
November 20, 2009 at 8:07 pm by: HR Hero Alerts
DHS Shifts Worksite Enforcement Strategy to Employers, Not Illegal Workers
May 4, 2009 at 8:36 pm by: HR Hero
Mass Audit Notices from ICE Evidence of New Immigration Tactic
July 6, 2009 at 5:03 pm by: HR Hero Alerts
In 1975 Jaws was the block buster of the summer, a great white shark turned man-eater terrorizing the island waters of Amity.
The irony is that same decade the few human resource laws revolving around employment began gaining traction. First designed to govern the workplace of the largest corporations with time the laws would explode in number and impact the smallest businesses. Today almost 35 years later there are over 300 federal and state laws governing employment in these United States.
Like the great white shark, sensing a vulnerable and abundant prey, law makers continue to create laws governing employment and agencies whose business it is to enforce the laws. I imagine those tasked with the business of enforcing the laws saying “brother business is good” as can be seen from;
EEOC Discrimination Charges Set Records in 2009
January 7, 2010 at 11:18 am by: HR Hero Alerts
If you’re a business owner you’re as vulnerable and as likely to be attacked as the swimmers in Amity by a predator whose sole existence is to attack you. No less terrifying than Jaws, the agencies charged with enforcing the employment laws are not only out in the deep waters of the large employer pool they also are in the crowded shallower waters of the small employer pool. You can find them swimming in your payroll, safety, benefits, employment practices and workers compensation programs.
How do you protect your business and your assets, one way is to get out of the water.
Always at your service,
Rick Matthews
P.S. For the past 18 years I’ve been showing business owners how to “get out of [the employment] water” and still have direction and control over the work site by deploying outsourcing strategies. If you want to learn more visit our site at www.primaryhroutsourcing.com or email info@PBS-HR.com
[1] Quote taken from Napa Valley Register article “Seven fined by state officials over tax, payroll issues” By KERANA TODOROV, Register Staff Writer | Posted: Thursday, March 27, 2008 12:00 am
